March 25, 2026/4 min read/affiliate marketing

"What to Pay Your Affiliates: Commission Structures That Don't Blow Up"

Flat fee vs percentage, CPA vs rev-share, hold periods and clawbacks — a practical guide to setting affiliate commissions without losing money.

The question every founder asks first

"How much should I pay my affiliates?" is the most common question we hear from startups launching their first program. And the most common answer online — "it depends" — is useless.

Here's a more honest answer: start with a number that makes you slightly uncomfortable, then adjust based on data. If your commission is too low, nobody will promote you. If it's too high, you'll attract partners but lose money on every sale.

The two main models

Every commission structure is a variation of two models:

CPA (Cost Per Acquisition) — a flat dollar amount per sale. Partner refers a customer, you pay $25. Simple.

Revenue share — a percentage of the sale. Partner refers a customer who buys a $200 product, you pay 15% ($30).

Both work. The right one depends on your product.

When to use flat CPA

Flat CPA works best when:

Your average order value is consistent (SaaS subscriptions, single-product stores)
You want predictable costs per acquisition
You're comparing affiliate CPA directly against paid ad CPA

The advantage is simplicity. You know exactly what each referred customer costs you. If your Google Ads CPA is $40 and your affiliate CPA is $25, the math is obvious.

Watch out for: setting CPA too high relative to customer lifetime value. If your LTV is $100 and your CPA is $30, you're spending 30% of the customer's value on acquisition. That might be fine — or it might not leave enough margin.

When to use revenue share

Revenue share works best when:

Your order values vary a lot (e-commerce with products from $20 to $500)
You want commissions to scale naturally with order size
You have a subscription product and want to pay on recurring revenue

The advantage is that your commission automatically scales with the sale. A partner promoting your $500 product earns more than one promoting your $50 product, which aligns incentives.

Watch out for: high-value orders from partners who aren't actually driving quality traffic. A 20% rev-share on a $1,000 order is $200 — make sure that customer sticks around.

Picking a starting number

If you have no data, start here:

Physical products: 5-15% of sale price
Digital products / SaaS: 15-30% of first payment
High-ticket services: $50-200 flat CPA

These are starting points, not rules. The goal is to be competitive enough that partners bother promoting you, but not so generous that you lose money.

A useful test: look at what you'd pay for a Google or Meta ad click that converts at the same rate. If your paid CPA is $35, offering affiliates $25-30 per sale is competitive — you're getting a customer for less and only paying when they actually convert.

Hold periods: why you don't pay immediately

A hold period is the time between when a conversion happens and when the commission is confirmed. During this window, you can review the conversion and reverse it if needed.

Why this matters:

Refunds — if a customer returns the product within 14 days, you shouldn't pay the affiliate for that sale
Fraud — bot traffic, fake signups, and click farms take time to detect
Chargebacks — disputed credit card charges can take days to surface

Standard hold periods are 7-30 days depending on your refund policy. If you offer a 30-day money-back guarantee, your hold period should be at least 30 days.

Don't skip this. New affiliate managers often pay commissions immediately to make partners happy — then spend months trying to recover money from refunded sales.

Clawbacks: what happens when things go wrong

A clawback is when you reverse a commission after it's been approved. This happens when:

A customer gets a refund after the hold period
You discover fraudulent activity from a partner
A conversion is attributed to the wrong partner

Clawbacks are necessary but unpopular with partners. Be transparent about your policy from day one. Partners who understand the rules upfront rarely complain. Partners who get surprised with reversed commissions leave.

Tiered commissions: not yet

Many guides recommend tiered commissions from the start — "earn 10% on your first 10 sales, 15% after 20, 20% after 50." This sounds smart but creates complexity you don't need yet.

Tiers make sense when:

You have 20+ active partners
You want to incentivize your top performers to do more
You have enough data to know what "good" performance looks like

Until then, one rate for everyone. You can always add tiers later. You can't easily take them away.

The math that matters

Before you set any commission, know these three numbers:

Customer Lifetime Value (LTV) — how much revenue does an average customer generate over their lifetime?
Your target CPA — what's the most you're willing to pay to acquire a customer? (typically 15-30% of LTV)
Your paid acquisition CPA — what do you currently pay per customer through ads?

Your affiliate commission should be at or below your target CPA. If it's also below your paid CPA, affiliate marketing is a better deal than your ads — and you should invest more in it.

Start, measure, adjust

The worst commission structure is the one you spend three months designing and never launch. Pick a reasonable number, set a hold period, tell your partners the rules, and start tracking.

After 30 days, you'll have real data. You'll know your actual conversion rate, your effective CPA, and whether partners are generating quality traffic. That's when you optimize — not before.

Set up your tracking with Trcker — create your first offer in under 5 minutes.

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